With 2024 now well and truly underway, we sat down with Julien Kohn, guest speaker on RTL Radio’s Econews programme to discuss what the first few weeks of the year looked like for bond trading and what else could be in store in the months to come.

How would you describe bond trading activity since 2024 began?

Bond markets - and therefore bond trading - tend to go into hibernation each December, but just like they do every year, they quickly roared back in the first few weeks of 2024.
In January, activity significantly increased due to issuers returning to the primary market to raise debt, resulting in increased trading activity in the secondary market. So far, it's been a very interesting start to the year which gives a taste of what is yet to come.

Do you expect the growing focus on sustainable finance to impact GSSS bond trading? If so, in what ways?

Absolutely, more traders, portfolio managers and market participants have Key Performance Indicators (KPIs) when it comes to GSSS bonds.
This comes in addition to retail investors indicating that they are becoming more conscious of ESG criteria when compared to institutional investors when it comes to investing.
Having an impact, not only financially, will play a bigger role for financial market participants in the future. A trend, that the Luxembourg Stock Exchange was quick to recognise and implement in its business activities.

Are there any other trends that you expect to see on the horizon for bond trading horizon in 2024?

I expect volatility to stay elevated throughout the year. Markets currently expect 150 basis points rate cuts from the European Central Bank and the Federal Reserve until the end of the year.
A surprise on the lower or higher side could cause an increase in volatility.
On top of that we have a record year for elections - 2 billion voters are set to go to the polls this year - and geopolitical tensions brewing.
So overall, an interesting mixture for market participants that want to explore or continue bond trading in 2024. Longer term, technologies that help improve trading and/or are linked to the blockchain, will play a bigger role in bond markets. They will provide enhanced liquidity and efficiency on the bond trading side but also improve settlements of trades.

In your view, what benefits does retail-sized bond trading bring to financial market participants?

The increase in yields make the asset class finally interesting again for retail investors. This will bring increased liquidity to the market and financial market participants.
This allows issuers to access a wider pool of capital, which can be used to finance projects. Retail-sized bonds are also a great way to promote financial inclusion and so broaden ownership of financial assets.

How do you see the role of technology in facilitating retail-sized bond trading?

Technology has made it easier for retail investors to access information about bond markets.
Easier access to financial information like historical prices, current yield and credit ratings can help retail investors make more informed bond trading decisions.
Also, technology played a key role in giving retail investors access to bond markets in the first place. Overall, technology is playing a major role in making bond markets more accessible and efficient for retail investors.
Interested in learning more about retail-sized bond trading? Check out LuxXPrime - LuxSE's special segment exclusively dedicated to retail-sized bond trading with more than 1,500 to choose from.